TPA (Third Party Administrator) Health Insurance

• Written by Nidhi Goyal

  Reviewed by Munmi Sharma

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When you want to give all your attention to your loved one admitted to the hospital, a third party comes to handle your claim settlement process keeping you away from any hassles. They are called Third-Party Administrators (TPA). 

What is a TPA?

A TPA is an outsourced entity or an intermediary between the insurer and the insured that manages and processes insurance claims on behalf of an insurance company. A TPA is a company registered with the Authority, providing health services, engaged by an insurance company in its health services agreement mentioned under IRDAI regulations, 2016. The regulatory body has approved TPAs since 2001. 

TPAs assist in the claim process and create an interlink between hospitals and policyholders. They manage claims and insurance policies on behalf of the insured/policyholders. They are the first point of contact for queries in an insurance plan. A health insurance company chooses a TPA, and one can serve multiple insurance companies. They administer tasks, deal with documents, and aid in settling hospital bills. They provide other health services such as:

• Servicing claims under health insurance policies
• Pre-insurance medical examinations and health/medical insurance policies issued by foreign insurers or entirely foreign travel policies
• Also, they may arrange value-added services like ambulances, wellness programs, etc.

Why Do You Need TPAs in Health Insurance?

TPAs have an important role in health insurance. They bridge the gap between a policyholder and their insurance company and have tie-ups with many insurance companies. Below are other important roles of third-party administrators in health insurance.

• Communicates with Hospitals: This is one of the top responsibilities of TPAs. They arrange a hospital during an emergency and then maintain communication with a network hospital. They also provide valuable support for cashless and reimbursement claim settlements in the case of non-network hospitals. 
• Aids In Smooth Claim Settlement: They offer hand-holding during medical emergencies. From comprehending the situation and customer enrolment to issuing ID cards, TPAs help in cashless facilities and smooth claim settlement operations. Also, they offer assistance regarding the documentation of the insured. Hence, TPAs facilitate an efficient claim settlement process. 
• Cashless Hospitalisation: TPAs directly coordinate with network hospitals and may arrange cashless hospitalisation facilities. From claim submission to claim settlement, they manage it all for you.
• Manages Policy and Renewal: They also manage a policy's lifecycle. You don't have to worry about policy upgrades and renewal processes, so you can seamlessly receive coverage during a medical emergency. They also educate the policyholder about the most appropriate hospital based on current circumstances.
• Provides Unhindered Support: TPAs streamline claims processing and enhance customer service 24*7. They guide you appropriately on the required documents, so with the help of a TPA, you can get your treatment without any financial worries.
• Offers Extra Services: Provides underwriting support to the insurer and arranges other services such as customer services, ambulances, and wellbeing services. They help comprehend the technical jargon of an insurance plan and claim settlement process. It provides claim assistance.

What is the Difference between TPA and Insurance Providers?

An insurance provider is an insurance company that sells insurance policies to individuals, families or groups (policyholders). It provides insurance policies and coverage to the policyholder. On the other hand, TPA is an intermediary between an insurance policy or policyholder. The key responsibility of TPA is to analyse the medical condition for genuineness and initiate the claim settlement process on authenticity so that the policyholder can avail of it without any hassle. One TPA can associate itself with several insurers. 

Both have different responsibilities. A health insurance company hires a TPA to enhance customer satisfaction and partner with one to ensure smooth and efficient claim settlement processes. Though TPAs are not compulsory, incorporating them into the process improves the system's effectiveness and accessibility.

Requirements to Register as a Third-Party Administrator Health Insurance

We briefly mention getting the Certificate of Registration, but it might be more comprehensive. The eligibility criteria and application process for a license are given below-

Eligibility Criteria:

• Must be a share capital and registered under Companies Act, 2013. 
• They must exclusively provide healthcare services without getting involved in any other business.
• Must have the words “Insurance TPA” in its name.
• Must maintain a minimum Paid-Up Equity Share Capital of Rs 4Cr.
• The net worth must not fall below Rs 1 Cr during registration.
• Must comply with rules and regulations by GoI and other policies issued by the Authority.

Application for License:

• First, register for the IRDAI BAP Portal.
• The registration application should be submitted online to the Authority with a non-refundable fee of Rs 1,00,000 and other taxes.
• If documents are required, then they must be submitted on time.
• The Authority verifies the details and then may issue the Certificate of Registration.
• Approved applicants shall further pay a registration fee of Rs 2,00,000 and other taxes as applicable before getting the Certificate of Registration.

>>Read More: What does the Term TPA mean in Health Insurance?

Disclaimer: All plan features, benefits, coverage, and claims underwriting are subject to policy terms and conditions. Kindly refer to the brochure, sales prospectus, and policy documents carefully.